Canadian Overseas Petroleum Limited (LSE:COPL, CSE:XOP, OTC:VELXD) is expanding its acreage in Wyoming with the acquisition of the assets of Cuda Energy, funded by a US$20mln bridge loan and US$10mln share placing.
Cuda, currently in receivership, has an interest in the Barron Flats Shannon field (27% WI); Barron Flats Federal (Deep), Cole Creek and non-unitized lands (27.5%-33.333% WI) acreage that COPL bought into last year with the acquisition of Atomic Energy.
The deal for Cuda’s assets, which is expected to close by mid-June 2022, increases COPL's 2P reserves by 47% to 38.2mln barrels.
COPL's US subsidiary is also the operator of all Cuda’s acreage.
The bridge loan has a 12-month maturity, 12.5% interest per annum fixed coupon and is convertible into shares at a 25% premium to the price set for the US$10mln placing.
There is also a 7% implementation fee and warrants equal to 50% of the bridge loan drawdown will be issued to the lender.
A bookbuild today will determine the price of the placing, which also includes 50% warrants at a 20% premium to the placing price with 6 months expiry.
Arthur Millholland, COPL’s chief executive, said: "The Cuda acquisition is a significant growth milestone for COPL and a deal we have been in hot pursuit of for some months.
“We are funding it with a bridge loan. The convertible nature of the bridge loan allows the company to refinance our current credit facility and thus reduce our cost of capital.
“Over the coming months it is our intention to now pursue attractively priced Reserve Based Lending ('RBL') debt with which to refinance all debt currently supporting and carried by our Wyoming assets (and including the bridge loan if necessary).”